US futures fell on Wednesday after disappointing earnings from Netflix and further indications that the Federal Reserve will raise interest rates aggressively to curb inflation.
Contracts that track Wall Street’s tech-heavy Nasdaq 100 index fell 0.7% in the early European morning after Netflix speak Its decade-long subscriber growth rate ended in the first quarter of 2022, and it became “harder to grow membership” in many markets.
Analysts at JPMorgan attributed Wednesday’s drop in US futures to “micro-catalysts”, including Netflix’s disappointing results, as opposed to economic factors. The broader macro has boosted trading in recent weeks.
The streaming company expected in its latest earnings update that subscriber numbers would drop another 2 million in the current quarter, having fallen by about 200,000 in the previous three months. Its shares lost more than 25% in pre-market trading on Wednesday, suggesting $40 billion could be wiped off its value after the opening bell on Wall Street.
Futures that track the broad S&P 500 index fell 0.4 percent, while in Europe, the region’s Stoxx 600 index gained 0.4 percent in morning trades after the close. The previous epidemic decreased by 0.8%.
More pressure on equities, IMF on Tuesday cut the country’s global growth forecast for this year is 3.6%, down 0.8 percentage points from the January forecast, noting that Russia’s invasion of Ukraine would disrupt economic progress while at the same time cause inflation.
In the government debt market, the yield on the 10-year US Treasury note fell 0.02 percentage points to 2.9%.
One sell-off in the previous session took the 10-year “real yield” – adjusted to reflect medium-term inflation expectations – into positive territory for the first time since the coronavirus crisis in March 2020. It hovered in the negative territory. 0.04% on Wednesday morning.
Bond yields increase as their prices fall.
Real income jumped this year with expectations of a Fed tightening of monetary policy in an attempt to limit the rate of increase in consumer prices, which have reached annual 8.5 percent last month. By contrast, those climbing real yields have reduced the appeal of — and exacerbated the pressure on — riskier parts of financial markets, including many tech and traditional stocks. more speculative.
This week’s yield moves come in a string of speeches by senior Fed officials, with Fed chair Jay Powell set to speak on Thursday. Charles Evans, president of the Chicago Fed, has said the central bank is likely to raise interest rates between 2.25% and 2.5% later this year. James Bullard, president of the Fed’s St Louis branch, also said a large 0.75 percentage point rate hike could come at some point in 2022. The Fed’s current benchmark interest rate is 0.25. -0.50%.
Elsewhere in stock markets, Hong Kong’s Hang Seng index lost 0.4%, while Japan’s Topix gained 1%. “Continued yen weakness is helping Japanese stocks rally again this morning,” said JPMorgan analysts. Yen down through 128 against the dollar This week, trading is at a 20-year low.
In commodity markets, Brent crude, the international oil benchmark, rose 1% to just over $108 a barrel, falling 5% on Tuesday in a drop after four days of gains.
